Barrio Queen Logo

Barrio Queen

BQ Concepts, LLC
https://www.bbq-holdings.com/
1-952-294-1300
12701 Whitewater Drive, Suite 100, Minnetonka, Minnesota 55343-4164

Initial Investment Range

$1,346,250 to $7,515,750

Franchise Fee

$105,750 to $150,750

We offer Barrio Queen franchises. As a franchisee, you will operate a restaurant called Barrio Queen specializing in authentic Southern Mexican food and beverages prepared using proprietary recipes on a take-out or eat-in basis, and branded, licensed products.

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Barrio Queen March 28, 2025 FDD Risk Analysis

Free FDD Library AI Analysis Date: July 16, 2025

DISCLAIMER: Not Legal Advice - For Informational Purposes Only. Consult With Qualified Franchise Professionals.

1

Franchisor Stability Risks

Start Here
Total: 10
3
4
3

Disclosure of Franchisor's Financial Instability

High Risk

Explanation

The financial statements for the Guarantor, MTY Franchising USA, Inc., are provided. These show a significant swing from a net income of $16.9 million in 2023 to a net loss of $12.5 million in 2024. This loss was driven by major impairment charges on intangible assets and goodwill. Such a negative performance trend may suggest financial instability, potentially impacting the franchisor’s ability to support you and grow the brand.

Potential Mitigations

  • A franchise accountant should analyze the guarantor's complete financial statements, including the impairment charges and the high ratio of intangible assets to total assets.
  • It is important to discuss the reasons for the recent net loss and the impairment charges directly with the franchisor.
  • Your business advisor can help you assess if the guarantor has sufficient cash flow and resources to support a new franchise system despite the recent reported loss.
Citations: Item 21, Exhibit B

High Franchisee Turnover

Low Risk

Explanation

This risk was not identified in the FDD package. Item 20 shows that because this is a new franchise system, there have been no franchisees to date. Therefore, there is no history of franchisee turnover. The lack of a track record is a separate risk, but high turnover itself is not present. Evaluating turnover is crucial in established systems as it can indicate franchisee dissatisfaction or lack of profitability.

Potential Mitigations

  • Although no turnover data exists, you should discuss the franchisor’s long-term franchisee support and relationship goals with a business advisor.
  • Your attorney can help you question the franchisor about their strategies to ensure low turnover and franchisee success in the future.
  • An accountant can help you model different scenarios to understand the financial performance required to ensure your own viability in a new system.
Citations: Not applicable

Rapid System Growth

Medium Risk

Explanation

The FDD package shows very rapid franchise growth is a potential future risk, as the system is brand new with zero operating franchisees. The parent company, MTY Franchising USA, Inc., operates many other brands and has experience, but its ability to properly support this specific new system if it grows quickly is untested. Rapid growth can strain support resources, affecting training, site selection, and operational assistance for all franchisees.

Potential Mitigations

  • Engaging a business advisor to question the franchisor about their specific plans to scale support infrastructure for the Barrio Queen brand is important.
  • Your accountant should review the parent company's financials to assess if they are allocating sufficient resources to support new brand growth.
  • Discuss with your attorney the support levels contractually promised in the Franchise Agreement to ensure they are clearly defined.
Citations: Item 20, Item 21, Exhibit B

New/Unproven Franchise System

High Risk

Explanation

This is a new and unproven franchise system. The 'SPECIAL RISKS' section and Item 1 state that BQ Concepts, LLC (the Franchisor) only began offering franchises in March 2023. Item 20 confirms there are zero operating franchisees. Investing in a new system carries higher risk because the business model's success for franchisees is unproven, brand recognition is minimal, and support systems are undeveloped. Your success depends entirely on a concept that has only operated under corporate ownership.

Potential Mitigations

  • A thorough review of the franchisor's and its parent company's financial stability with your accountant is critical.
  • It's essential to have your business advisor help you conduct extensive due diligence on the corporate store operations and the experience of the management team.
  • Your attorney should attempt to negotiate more favorable terms to compensate for the higher risk associated with an unproven system.
Citations: FDD Page i, Item 1, Item 20

Possible Fad Business

Low Risk

Explanation

This risk was not identified in the FDD package. The Barrio Queen concept, specializing in authentic Southern Mexican food, operates in a well-established restaurant segment rather than being tied to a novel or short-lived trend. The underlying business of full-service Mexican dining has demonstrated long-term consumer demand. However, the success of any specific restaurant concept still depends on execution and market conditions.

Potential Mitigations

  • It is still prudent to have a business advisor help you research the local market to confirm demand for this specific style of restaurant.
  • Discuss the brand's plans for menu innovation and concept evolution with the franchisor to gauge long-term adaptability.
  • Your financial advisor can help assess the long-term viability of the business model in your specific economic environment.
Citations: Item 1, Item 11

Inexperienced Management

Medium Risk

Explanation

While the franchisor entity, BQ Concepts, LLC, is new to franchising, its key personnel and parent company, MTY Franchising USA, Inc., have extensive experience operating and franchising a large number of other restaurant brands. Item 2 lists executives with long careers at MTY, Kahala Brands, and Famous Dave's. This experience may mitigate some risks of a new system, but it does not guarantee success for this specific brand or that support will be adequate.

Potential Mitigations

  • A business advisor can help you investigate the track record of the specific executives listed in Item 2 with their other managed brands.
  • You should question the franchisor about how the parent company's experience and resources will be specifically applied to support Barrio Queen franchisees.
  • Your attorney can help you ask existing franchisees of other MTY brands about the quality of support they receive from the parent organization.
Citations: Item 1, Item 2

Private Equity Ownership

Medium Risk

Explanation

The franchisor, BQ Concepts, LLC, is part of a large and complex corporate structure ultimately controlled by MTY Food Group, Inc., a publicly-traded company. The guarantor, MTY Franchising USA, Inc., is a holding company for numerous brands. Such structures, common with private equity or large consolidators, can lead to decisions that prioritize shareholder returns or the performance of other brands over the long-term health of your specific franchise system, potentially affecting support and fees.

Potential Mitigations

  • A business advisor should help you research MTY's reputation and historical treatment of franchisees across its various brands.
  • It is important to understand the complex corporate structure and the role of the guarantor, MTY Franchising USA, Inc., by consulting with your attorney.
  • Your accountant can help assess how the financial performance of the larger parent organization might impact the resources available to your brand.
Citations: Item 1, Item 21, Exhibit B

Non-Disclosure of Parent Company

Low Risk

Explanation

The FDD discloses the parent company structure, identifying MTY Franchising USA, Inc. as the guarantor of the franchisor's obligations. Audited financial statements for this guarantor are provided in Exhibit B, and the Performance Guaranty is in Exhibit C. This structure is transparently disclosed, and the provision of parent financials and a guaranty mitigates the risk of a thinly capitalized subsidiary franchisor. The key risk here shifts to the financial health of the guarantor itself.

Potential Mitigations

  • Your accountant should perform a thorough analysis of the provided parent company financial statements to assess their strength.
  • It's wise to have your attorney review the specific terms of the Performance Guaranty to understand what obligations are covered.
  • A discussion with your business advisor can help clarify the relationship between the franchisor, its parent, and the support you can expect.
Citations: Item 1, Item 21, Exhibit C

Predecessor History Issues

Medium Risk

Explanation

The franchisor, BQ Concepts, LLC, acquired the brand from a predecessor, L&S Culinary Concepts, LLC, in March 2022. Item 3 discloses a significant litigation history involving numerous affiliate and predecessor entities under the MTY corporate umbrella, which is the ultimate parent. While BQ Concepts itself has no history, the extensive litigation involving its corporate family is a material fact that provides important context about the broader organization's relationship with its franchisees.

Potential Mitigations

  • Your attorney should carefully review the extensive litigation history of all affiliated and predecessor companies disclosed in Item 3.
  • Engaging a business advisor to research the reputation of the parent company, MTY, within the franchise industry is recommended.
  • You should directly question the franchisor about what has been learned from this past litigation and how it affects their current franchisee relations strategy.
Citations: Item 1, Item 3

Pattern of Litigation

High Risk

Explanation

Item 3 reveals a significant pattern of litigation involving the franchisor’s parent and affiliated companies. Multiple lawsuits were initiated by franchisees alleging fraud, misrepresentation, and violations of franchise law against brands like SweetFrog, Fresh Enterprises, and Papa Murphy's. Several of these cases resulted in substantial monetary awards or settlements paid by the franchisor entities. This history, while not directly involving BQ Concepts, suggests a potential for systemic issues within the broader corporate family that guarantees this franchise.

Potential Mitigations

  • It is critical to have your franchise attorney conduct a detailed review of all litigation disclosed in Item 3 to understand the nature of the claims.
  • You should treat a history of franchisee-initiated fraud and misrepresentation claims, even against affiliates, as a significant red flag.
  • A discussion with your attorney is necessary to assess the potential risk this litigation history poses to you as a franchisee of a related entity.
Citations: Item 3
2

Disclosure & Representation Risks

Total: 9
4
0
5

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

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3

Financial & Fee Risks

Total: 10
4
4
2

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

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4

Legal & Contract Risks

Total: 16
6
5
5

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

5

Territory & Competition Risks

Total: 5
3
1
1

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

6

Regulatory & Compliance Risks

Total: 10
4
4
2

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

7

Franchisor Support Risks

Total: 4
2
1
1

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

8

Operational Control Risks

Total: 12
2
6
4

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

9

Term & Exit Risks

Total: 18
9
6
3

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.

10

Miscellaneous Risks

Total: 2
2
0
0

Example Risk: Franchisee Financial Obligations

Blue Risk

Explanation

This risk involves the financial obligations that a franchisee must meet, including initial fees, ongoing royalties, and other required payments. Understanding these obligations is crucial for long-term success.

Potential Mitigations

  • Carefully review the Franchise Disclosure Document (FDD) and consult with a franchise attorney to fully understand all financial commitments before signing.
  • Conduct regular risk assessments
  • Implement monitoring and reporting systems

Unlock Full Risk Analysis

Purchase the complete risk review to see all 102 risks across all 10 categories.